Offshore Outsourcing and Utah

The Utah Technology Commission was the focus of the latest round of offshore outsourcing hysteria last week. The Deseret News reported on the meeting. Seems that the Dept. of Workforce Services contracted with a company to do customer service on one of their programs and that contractor turned around and sent some of the jobs to India. This, of course, presents a perfect opportunity for political posturing and that's just what happened. Here are some of the quotes:

"The perception is these are low-end jobs, that we can't find people to do them here, therefore we go offshore," said Rep. Brent Goodfellow, D-West Valley. "I think that the concern I would have is that this is just a start, and if we don't do something we will have high-end jobs going offshore as well."

Sen. David Thomas, R-South Weber, said he worries about identity theft overseas.

The commission's co-chairman, Rep. David Clark, R-Santa Clara, said he wondered if information is secure "when we're dealing with a land with a different set of laws."

Thomas wondered if Utah's rural Smart Sites could handle the work, but Nixon said Smart Site companies typically want to have jobs paying more than the $7 per hour typical of call center wages.

Of course, this is more fun to read when you know the personalities, but still, I'm sure you get the flavor. The funny thing is, we're not even talking about Utah jobs. Likely, the contract will go to some other state since Utah has no "Utah first" clause in its procurement code. That doesn't matter though since its the idea of the thing that gets people upset.

This kind of political pandering is inevitable because its very difficult to build support for conceptual issues like free trade and economic theory. Even if the legislators understand it, their constituents probably don't and so they're vulnerable. There were all kinds of people handing out leaflets at the Utah County Republican Convention on Saturday protesting NAFTA. I told them all I was a strong supported of NAFTA and they didn't even know what to say. They just looked at me like a traitor. Only Dave Harmer, Executive Director of Economic Development (and a private sector guy who's created a separate peace with the public world) had any kind of sophistication about the issue:

"Outsourcing benefits both parties, or it doesn't happen," said Harmer, who noted that the United States is a net importer of jobs.

Anxiety always results when there is an economic shift to more-efficient producers, he said. Harmer called it "a big mistake" for government to restrict the use of the most-efficient producer. He also said protectionist barriers delay the economic impact of such job shifting, but the impact is usually more severe than simply adjusting to the job losses.

The question is, should Utah taxpayers pay more to save a job in Ohio or West Virginia? The answer should be a resounding "no!" Paying to support relative inefficiencies always bites you in the end. We'll end up paying more money and get less. That doesn't sound like good government to me. If Utah lawmakers really want to know how to grow Utah's economy and compete globally, I'd recommend that they start by reading The Lexus and the Olive Tree by Thomas Friedman andAs the Future Catches You by Juan Enriquez.